Agreement of People website

Sign here if you support the campaign for a real democracy

Our blogs


AWTW FacebookAWTW Twitter

Your Say



The year of the bailiff

The extent to which we are cajoled, enticed, seduced and even tricked into spending more than we have – especially over the end-of-year holiday period – is revealed through startling figures. A poll conducted by the Norwich Union found that 73% people who responded said they would run out of money by today – several weeks before their next pay day at the end of the month.

Some 43% of people surveyed said this month was the most worrying time of year financially, while 19% did not think it was likely they could cover all their household bills during January. More than one in three thought they would go into debt this month. Some householders will dip into their savings or rely on credit and loans to make ends meet for the rest of the month, the Norwich Union said. It is estimated that Britons spent on average £781.86 extra over the festive period on gifts, socialising and sales shopping.

Global capitalism can only sustain itself by persuading people to buy increasing numbers of goods and services. It is the only way corporations can maintain rates of profit, which is what shareholders and stock exchanges are concerned about. Whether people need these commodities is irrelevant. What is absolutely essential is that they are sold so that the whole process can begin again and again and again.

This is not a new feature of capitalism, of course. But in the last 30 years of corporate-driven globalisation, the exponential growth in output has required an even greater growth in consumer spending – no matter how that is achieved. The deregulation of the financial sector paved the way for easy credit, cheaper mortgages, buy-now-pay-later deals and a view that if you got into debt you could always remortgage your house, which continued to soar in market value. Rampant consumerism went from a social phenomenon into a form of social compulsion, driven by advertising and marketing epitomised by slogans such as “Because you’re worth it”.

This has proved unsustainable at both a personal and at a corporate/financial level, where there is an unfolding crisis of insolvency as shown by the Northern Rock crisis. To sustain the level of expansion the economy demanded, the volume of credit and debt exploded. As we show in A House of Cards, this appeared in various forms as traditional banking assets, stocks, shares and bonds, and an array of exotic and increasingly toxic derivative products. The expectation of continued growth and profits to service the debt fuelled an impossible dream, now shattered.

Now desperate banks are refusing to pass on the recent cut in interest rates to hard-pressed home owners, despite pressure from the government to do so. Sharp rises in gas and electricity prices are on their way, along with council tax increases. Falling house prices and higher lending rates reduces the possibility for remortgaging to raise extra cash. Little wonder then that despite most people being broke today after splashing out at Christmas, retailers are announcing the end of the consumer boom. Marks and Spencer today reported a fall in sales over the Christmas trading period. Sales fell 2.2% in the last three months of 2007, M&S said. Sales of clothes and homeware declined 3.2%, while food sales dropped 1.5%. It was the firm's worst performance for more than two years.

Another, even uglier, side of capitalism is beginning to reveal itself – a world of home repossessions, bailiffs, county court judgements, job losses and pay cuts. Creating a more sustainable economy, based on producing what is actually needed rather than maintaining profit margins, is a practical question for 2008.

Paul Feldman
AWTW communications editor
9 January 2008

Comment on this article

Your name

Your E-mail (we will not publish your E-mail)